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CLS directors boost holdings

Shares in the office landlord have rallied since news of successful vaccines in November
CLS directors boost holdings
  • Chief executive and chief financial officer have purchased a combined £152,000 in shares
  • The shares trade at a sharp discount to NAV reflecting caution around new lettings and occupancy levels

Concerns surrounding how many companies will make a permanent shift to home- or hybrid-working post-pandemic has caused shares in London-listed office landlords to trade at sizeable discounts to net asset value. For CLS (CLI), that gap stands at 27 per cent versus NAV at the end of December. 

That market valuation can either be viewed as a value opportunity or an apt foreshadowing of falling occupancy. CLS's management has placed itself in the former camp, with chief executive Fredrik Widlund and chief financial officer Andrew Kirkman purchasing a combined £152,000 in shares in the group.

The executives could have good reason for their apparent confidence. Estimated rental values have grown across the UK, France and Germany. The latter continued to lead the way, generating a 3.1 per cent increase. An increase in the portfolio valuation and a robust rent collection rate of 99 per cent, also meant the EPRA net tangible asset value rose by almost 6 per cent, ahead of forecasts from some analysts.

However, potential occupiers have been circumspect around the economic outlook, which caused a rise in the vacancy rate to 5.3 per cent at end of December, up from 4 per cent the prior year. 

The roll-out of the vaccine across Europe could aid the pace of new lettings, although Mr Widlund has indicated that he doesn’t expect a marked increase in occupancy before June, when more social restrictions are lifted. 

The shares have rallied almost a fifth since news of the vaccine success broke in November. Yet given the group’s resilient rent collection and exposure to the higher demand German office market, there could be room for a further re-rating. Buy.

Last IC view: Buy, 223p, 9 Mar 2021

Buys    
CompanyDirector/PDMRDatePrice (p)Aggregate value (£)
CLS HoldingsFredrik Widlund (ce)10 Mar 202122051,450
CLS HoldingsAndrew Kirkman (cfo)10 Mar 2021222110,760
DevroSteve Good (ch)10 Mar 202118436,880
Howden JoineryPaul Hayes (cfo)10 Mar 202171449,980
MondiMike Powell (cfo)10 Mar 20211,79099,273
Rathbone BrothersClive Bannister10 Mar 20211,640250,920
SageLee Perkins11 Mar 202158988,314
Serco GroupTim Lodge12 Mar 20211,27250,880
St James's PlaceEmma Griffin15 Mar 20211,24024,809
Standard Life AberdeenJonathan Paul Asquith09 Mar 202129688,878
Standard Life AberdeenSir Douglas Jardine Flint (ch)09 Mar 202129739,793
UDG HealthcareShane Cooke15 Mar 202176295,250
Ultra ElectronicsMark Josceline Sclater (cfo)09 Mar 20212,07568,819
Sells    
CompanyDirector/PDMRDatePrice (p)Aggregate value (£)
Anglo AmericanDidier Charreton10 Mar 20212,9282,553,743
Anglo AmericanBruce Cleaver10 Mar 20212,885721,250
Wizz Air HoldingsHeiko Holm (cfo)11 Mar 20215,515551,500